Subscription payments and car insurance don’t immediately seem the most obvious of bedfellows. Most policies are priced on the driver’s history of making claims, coupled with both the actual replacement cost of the vehicle to be insured, based on age and condition, and a loading for the typical cost of replacing or repairing the vehicle or some other property of a third party involved in any accident with the vehicle. Insurance companies then compute an annual fee that covers the terms of the policy and the insured pays it, either as a lump sum or perhaps in monthly instalments.
But what if the insurance policy was built on the car rather than the driver? How it was driven would play a big part in gauging the cost of insurance premiums, and the payment could be varied depending on whether the driver met whatever was considered to be the optimum way of driving that vehicle. Now, that would make a very good candidate for a modern, subscription-based payment environment. And that is the goal that Octo Telematics has firmly in its sights, using Zuora’s subscription management tools.
To make it work, a vehicle has to be fitted with a suitable monitoring system that can report on how it is being driven, and where it was when it was being driven in that manner. This gives the insurer a very clear picture of how the car is being driven generally – is it speeding, is acceleration/deceleration too hard? There is a host of other possible measurements, not least of course the fact that it can provide an objective report of the vehicle’s movements when involved in an accident.
But by insuring the car and the way it is driven and not the driver specifically, this also opens up new opportunities for what Zuora refers to as the world of usership, rather than ownership. It matters not who is driving the vehicle, so long as they are numbered amongst those with authority to drive it.
This opens the way for new vehicle and ride sharing services to be created, the specific target of Edwin Colella, Vice President of Mobility at Octo Telematics.
It is his job to work with businesses and communities that are looking to start car and ride-share services using the Zuora-based logistical and business management tool they will require to make it work effectively. This covers every aspect, from the billing of members for the use they have made of the service, the logging of such details, the insurance of the vehicles and even logging the contribution of each subscriber to the acquisition of new vehicles out into the future.
If that is the way a community might wish things to run, it could also manage the pro rata contribution individual subscribers need to make to the maintenance and repair of privately owned vehicles pooled into a car share scheme, depending upon the log of their driving capabilities. Colella explains:
What Octo Telematics has developed since it started in 2013 is a solution that enables different business models and sectors which are not directly insurance related, like a sharing of renting and fleet management.
One of the main uses of this service is fleet telematics, where it is necessary to know exactly how the vehicles are being used within one fleet. This is very relevant for fleet managers because it offers them greater efficiency, with better asset utilisation and real time tracking for logistics purposes. It also manages the keyless entry, with unlocking and locking of the doors achieved with a contactless card.
Currently the company is managing services used by some 1.2 million subscribers, all of whom are using Zuora’s solutions to pay subscription costs derived from the hours spent with the vehicle they've been using:
In practice, you look for a car on an online map, select the car and when you reach it you unlock it. Then you drive, and when you have finished you exit the car, and you lock the doors. After a few moments a receipt is received and at the end of the month an invoice is sent to you. This entire process is performed around 400,000 times per month. It is also possible to follow payments, exceptions and activities every day, giving the companies offering the services a highly flexible management environment while providing for the driver a fully digital and fully autonomous way of renting. Once you've registered, you do not have to do anything, except find a convenient car and use it.
This does equate to being a self-drive version of Uber, he agrees:
If you analyse the two models, one is vehicle sharing and the other model is ride-sharing. In vehicle sharing you actually drive the car, in ride-sharing you are driven by somebody.
Octo Telematics offers subscription models for both service delivery options that work across the board from small community groups or businesses through to large taxi firms, and also includes the option to offer vehicles on a free-floating basis where there is no ‘home base’, through to full, station-based operations. These are the equivalent of traditional vehicle rental services, but without the necessity of having a pre-agreed return date. While the driver has the vehicle, that person’s only responsibility is to keep paying for it.
The free-floating option tends to get used most often in large conurbations, such as the centre of London or Rome. In such places, the density of users also means that cars can be left in normal parking places. It also opens up the possibility of using vehicles designed specifically for those traffic and road conditions, such as electric cars.
As well as the UK, the company can provide this subscription management service to businesses in Italy, France, Spain, Switzerland and Denmark.
The idea of being licensed to drive and then not bother with the hassles of owning a car, especially in a big city, has an obvious appeal, not least because there is a large lump of capital tied up in an object that spends much – probably most – of its time unused, when someone else could be making use of it and paying for the privilege. Colella concurs:
Yes, exactly, and this enabled also by our technology. So there is traditional cab sharing, where there is a company owning the vehicle, and peer-to-peer sharing with the vehicles belonging to a peer group. We provide the payment services and the technology that glues everything in terms of processes.